Fall Accounting Modules: Research Paper and Quiz Assistance

Fall Accounting Modules: Research Paper and Quiz Assistance
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Fall Accounting Modules: Research Paper and Quiz Assistance

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43. Briggs Manufacturing produces a subassembly used in the production of jet aircraft engines. The...
Briggs Manufacturing produces a subassembly used in the production of jet aircraft engines. The assembly is sold to engine manufacturers and to aircraft maintenance facilities. Projected sales for the coming four months follow:
January 40,000
February 50,000
March 60,000
April 60,000
The following data pertain to production policies and manufacturing specifica- tions followed by Briggs Manufacturing:
a. Finished goods inventory on January 1 is 32,000 units, each costing $148.71. The desired ending inventory for each month is 80 percent of the next month’s sales.
b. The data on materials used are as follows:
Direct Material Per-Unit Usage Cost per Pound
Metal 10 lbs. $8
Components 6 2
Inventory policy dictates that sufficient materials be on hand at the beginning of the month to produce 50 percent of that month’s estimated sales. This is exactly the amount of material on hand on January 1.
c. The direct labor used per unit of output is four hours. The average direct labor cost per hour is $9.25.
d. Overhead each month is estimated using a flexible budget formula. (Activity is measured in direct labor hours.)
Fixed-Cost Component Variable-Cost Component
Supplies — $1.00
Power — 0.50
Maintenance $ 30,000 0.40
(continued)








Fixed-Cost Component Variable-Cost Component

Supervision 16,000 —
Depreciation 200,000 —
Taxes 12,000 —
Other 80,000 1.50
e. Monthly selling and administrative expenses are also estimated using a flexible budgeting formula. (Activity is measured in units sold.)
Fixed Costs Variable Costs

Salaries $50,000 —
Commissions — $2.00
Depreciation 40,000 —
Shipping — 1.00
Other 20,000 0.60
f. The unit selling price of the subassembly is $215.
g. All sales and purchases are for cash. The cash balance on January 1 equals
$378,000. If the firm develops a cash shortage by the end of the month, suffi- cient cash is borrowed to cover the shortage. Any cash borrowed is repaid at the end of the quarter, as is the interest due. (Cash borrowed at the end of the quar- ter is repaid at the end of the following quarter.) The interest rate is 12 percent per annum. No money is owed at the beginning of January.

Required
Prepare a monthly operating budget for the first quarter with the following schedules:
1. Sales budget
2. Production budget
3. Direct materials purchases budget
4. Direct labor budget
5. Overhead budget
6. Selling and administrative expenses budget
7. Ending finished goods inventory budget
8. Cost of goods sold budget
9. Budgeted income statement (ignore income taxes)
10. Cash budget
44. 15. Finding the WACC Given the following information for Lightning Power Co., find the WACC....
15. Finding the WACC Given the following information for Lightning Power Co., find the WACC. Assume the company’s tax rate is 35 percent.

Debt: 8,000 6.5 percent coupon bonds outstanding, $1,000 par value, 25 years to maturity, selling for 106 percent of par; the bonds make semiannual payments.
Common stock: 310,000 shares outstanding, selling for $57 per share; the beta is 1.05.
Preferred stock: 15,000 shares of 4 percent preferred stock outstanding, currently selling for $72 per share.
Market: 7 percent market risk premium and 4.5 percent risk-free rate.
45. 3-4 DO IT! In March, Kelly Company had the following unit production costs: materials $10 and...
3-4
DO IT!

In March, Kelly Company had the following unit production costs: materials
$10 and conversion costs $8. On March 1, it had zero work in process. During March, Kelly transferred out 22,000 units. As of March 31, 4,000 units that were 40% complete as to conversion costs and 100% complete as to materials were in ending work in process.
(a) Compute the total units to be accounted for.
(b) Compute the equivalent units of production.
(c) Prepare a cost reconciliation schedule, including the costs of materials transferred out and the costs of materials in process.













EXERCISES
























46. Carlyle Lighting Products produces two different types of lamps:
Carlyle Lighting Products produces two different types of lamps: a floor lamp and a desk lamp. Floor lamps sell for $30, and desk lamps sell for $20. The projected income statement for the coming year follows:
Sales ………………………………..$600,000
Less: Variable costs …………………400,000
Contribution margin ……………….$200,000
Less: Fixed costs ……………………150,000
Operating income …………………..$ 50,000
The owner of Carlyle estimates that 60 percent of the sales revenues will be produced by floor lamps and the remaining 40 percent by desk lamps. Floor lamps are also responsible for 60 percent of the variable expenses. Of the fixed expenses, one-third are common to both products, and one-half are directly traceable to the floor lamp product line.

Required:
1. Compute the sales revenue that must be earned for Carlyle to break even.
2. Compute the number of floor lamps and desk lamps that must be sold for Carlyle to break even.
3. Compute the degree of operating leverage for Carlyle Lighting Products. Now assume that the actual revenues will be 40 percent higher than the projected revenues. By what percentage will profits increase with this change in sales volume?
47. In April of the current year, Freeman Steel Company transferred Herb Porter from its factory in...
In April of the current year, Freeman Steel Company transferred Herb Porter from its factory in Nebraska to its plant in Ohio. The company's SUTA tax rates based on its experience ratings are 3.2% in Nebraska and 3.8% in Ohio. Both states base the tax on the first $9,000 of each employee's earnings. This year, Freeman Steel Company paid Herb Porter wages of $20,900; $2,800 were paid in Nebraska and the remainder in Ohio. Compute the following: round your answers to the nearest cent.
a.Amount of SUTA tax the company must pay to Nebraska on Porter's wages
$
b.Amount of SUTA tax the company must pay to Ohio on Porter's wages
$
c.Amount of the net FUTA tax on Porter's wages (Ohio is a credit reduction state-0.9%.)Copy and paste your question here...
48. 131.Two income statements for Toby Sam Enterprises are shown below: Toby Sam Enterprises Income...
131.Two income statements for Toby Sam Enterprises are shown below:

Toby Sam Enterprises Income Statement
For the Years 2 and 1 Ending December 31

Year 2 Year 1
Fees earned $674,350 $520,600
Operating expenses 472,045 338,390
Operating income $202,305 $182,210

Prepare a vertical analysis of Toby Sam Enterprises income statements. Has operating income increased ordecreased as a percentage of revenue?
a.Yes, increased by 5%.b. Yes, increased by 111%.
c. No, decreased by 5%.d. No, decreased by 111%




132.For the year ending December 31, Orion, Inc. mistakenly omitted adjusting entries for $1,500 of supplies that wereused, (2) unearned revenue of $4,200 that was earned, and (3) insurance of $5,000 that expired. For the yearending December 31, what is the effect of these errors on revenues, expenses, and net income?
a.Revenues are overstated by $4,200.b. Net income is overstated by $2,300.
c. Expenses are overstated by $6,500.d. Expenses are understated by $3,500.

133.A business pays bi-weekly salaries of $20,000 every other Friday for a ten-day period ending on that day. Theadjusting entry necessary at the end of the fiscal period ending on the second Wednesday of the pay period includesa
a.debit to Salary Expense of $8,000.b. debit to Salaries Payable of $8,000
c. credit to Salary Expense of $16,000d. credit to Salaries Payable of $16,000

134.A business pays bi-weekly salaries of $20,000 every other Friday for a ten-day period ending on that day. The lastpayday of December is Friday, December 27. Assuming the next pay period begins on Monday, December 30 andthe proper adjusting entry is journalized at the end of the fiscal period (December 31). The entry for the paymentof the payroll on Friday, January 10 includes a
a.debit to Salary Expense of $16,000b. debit to Salary Expense of $4,000
c. credit to Salary Payable of $16,000d. credit to Salary Payable of $4,000




135.Explain the difference between accrual basis accounting and cash basis accounting.
136.Indicate with a Yes or No whether or not each of the following accounts would, under normal circumstances,require an adjusting entry.
1.Cash
2.Prepaid Expenses
3.Depreciation Expense
4.Accounts Payable
5.Accumulated Depreciation
6.Equipment



137.Classify the following items as: (1) prepaid expense, (2) unearned revenue, (3) accrued expense, or (4) accruedrevenue.

a)Fees received but not yet earned
b)Fees earned but not yet received
c)Paid premium on a one-year insurance policy
d)Property tax owed to be paid beginning of next year
49. 61.Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2014. Demers reported...
61.Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2014. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.
Demers earns income and pays dividends as follows:
Assume the EQUITY METHOD is applied.
Compute the non-controlling interest in the net income of Demers at December 31, 2015.
A. $18,400.
B. $14,400.
C. $22,600.
D. $24,000.
E. $12,600.
62.Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2014. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.
Demers earns income and pays dividends as follows:
Assume the EQUITY METHOD is applied.
Compute the non-controlling interest in the net income of Demers at December 31, 2016.
A. $20,400.
B. $24,600.
C. $26,000.
D. $14,000.
E. $12,600.
63.Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2014. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.
Demers earns income and pays dividends as follows:
Assume the EQUITY METHOD is applied.
Compute the non-controlling interest in Demers at December 31, 2014.
A. $135,600.
B. $137,000.
C. $112,000.
D. $100,000.
E. $118,600.
64.Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2014. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.
Demers earns income and pays dividends as follows:
Assume the EQUITY METHOD is applied.
Compute the non-controlling interest in Demers at December 31, 2015.
A. $107,000.
B. $126,000.
C. $109,200.
D. $149,600.
E. $148,200.
65.Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2014. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.
Demers earns income and pays dividends as follows:
Assume the EQUITY METHOD is applied.
Compute the non-controlling interest in Demers at December 31, 2016.
A. $107,800.
B. $140,000.
C. $165,200.
D. $160,800.
E. $146,800.
66.Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2014. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.
Demers earns income and pays dividends as follows:
Assume the INITIAL VALUE is applied.
Compute Pell's investment in Demers at December 31, 2014.
A. $500,000.
B. $574,400.
C. $625,000.
D. $542,400.
E. $532,000.
67.Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2014. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.
Demers earns income and pays dividends as follows:
Assume the INITIAL VALUE is applied.
Compute Pell's investment in Demers at December 31, 2015.
A. $625,000.
B. $664,800.
C. $592,400.
D. $500,000.
E. $572,000.
68.Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2014. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.
Demers earns income and pays dividends as follows:
Assume the INITIAL VALUE is applied.
Compute Pell's investment in Demers at December 31, 2016.
A. $592,400.
B. $500,000.
C. $625,000.
D. $676,000.
E. $620,000.
69.Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2014. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.
Demers earns income and pays dividends as follows:
Assume the INITIAL VALUE is applied.
How much does Pell record as Income from Demers for the year ended December 31, 2014?
A. $32,000.
B. $74,400.
C. $73,000.
D. $42,400.
E. $41,000.
2014 Dividends $40,000 × .80 = $32,000
70.Pell Company acquires 80% of Demers Company for $500,000 on January 1, 2014. Demers reported common stock of $300,000 and retained earnings of $210,000 on that date. Equipment was undervalued by $30,000 and buildings were undervalued by $40,000, each having a 10-year remaining life. Any excess consideration transferred over fair value was attributed to goodwill with an indefinite life. Based on an annual review, goodwill has not been impaired.
Demers earns income and pays dividends as follows:
Assume the INITIAL VALUE is applied.
How much does Pell record as Income from Demers for the year ended December 31, 2015?
A. $90,400.
B. $40,000.
C. $89,000.
D. $50,400.
E. $56,000.
2015 Dividends $50,000 × .80 = $40,000
50. During the first month of operations, ABC Company incurred the
During the first month of operations, ABC Company incurred the following costs in ordering and receiving merchandise for resale. No inventory was sold.
List price, $100, 200 units purchased
Volume discount, 10% off list price
Paid freight costs, $56
Insurance cost while goods were in transit, $32
Long-distance phone charge to place orders, $4.35
Purchasing department salary, $1,000
Supplies used to label goods at retail price, $9.75
Interest paid to supplier, $46
Required
What amount do you recommend the company record as merchandise inventory on its balance sheet? Explain your answer. For any items not to be included in inventory, indicate their appropriate treatment in the financial statements.